Jerome Kerviel

"Rogue Trader" Jerome Kerviel Awarded €400,000 Over "Unfair" SocGen Dismissal

Jerome Kerviel, who was convicted of causing a record trading loss of €4.9 billion at Societe Generale SA, won a payout of more than 450,000 euros in a Paris employment lawsuit over claims he was unfairly dismissed. "It’s a scandalous decision," said Arnaud Chaulet, a lawyer representing Societe Generale.

SocGen Bosses Knew 'Rogue Trader' Kerviel Was Taking Massive Risks

Bosses at French banking giant Societe Generale were aware of the activities of "rogue trader" Jerome Kerviel, a top detective working on the case reportedly told an investigating judge, according to France24. The French investigative news website, Mediapart, quoted Nathalie Le Roy as telling judge Roger Le Loire she was "certain" that Kerviel's superiors "could not have been unaware" he was taking wildly risky bets on derivatives. However, as Bloomberg reports, SocGen, in a statement released on Monday, that several judicial decisions have assigned exclusive criminal responsibility to Kerviel, adding "it’s just the opinion of a person and not based on the discovery of new documents."

Frontrunning: September 5

  • Euro left reeling after ECB's liquidity splurge (Reuters)
  • Coalition Emerges to Battle Islamic State Militants (WSJ)
  • Ukraine Gas Chief Takes on Gazprom in Race With Winter (BBG)
  • Nato leaders fail to agree spending targets (FT)
  • JPMorgan Had Exodus of Tech Talent Before Hacker Breach (BBG)
  • Mercedes-Benz Sales Rise Despite Weak German Demand (WSJ)
  • Secret Network Connects Harvard Money to Payday Loans (BBG)
  • ICE looks to crack financial data market (FT)

Presenting The Next Market Rigged By High Frequency Trading

Almost a month ago, we wrote "This Is The One Financial Product Now Targeted By The HFT Swarm", in which after briefly perusing the Virtu S-1 filing, we concluded that "one product stood out. It is highlighted on the chart below: FX."

We are happy to report that this time the mainstream media is following our reports much more closely then five years ago, because overnight none other than Bloomberg came out with "High-Frequency Traders Chase Currencies as Stock Volume Recedes" in which we read, guess what, "Forget the equity market. For high-frequency traders, the place to be is foreign exchange." But our readers already knew this of course...

Frontrunning: March 20

  • Possible debris off Australia a 'credible lead' for missing Malaysia jet (Reuters)
  • Maldives and Afghanistan: Theories Blossom for Airliner (BBG)
  • Ukraine Military Concedes on Crimea as Russia Takes Hold (BBG)
  • Asia Stocks Drop on Fed; H-Share Index Enters Bear Market (BBG)
  • Scientists say destructive solar blasts narrowly missed Earth in 2012 (Reuters)
  • GM’s Ignition Victims Need Help From Bankruptcy Judge (BBG)
  • U.S. Alleges Inside Traders Used Spycraft, Ate Evidence (WSJ)
  • God Meets Profit in Obama Contraceptive Rule Court Case (BBG)

This Is The One Financial Product Now Targeted By The HFT Swarm

In order to determine if there is indeed truth behind the speculation that growth for the HFT space may have topped out, we decided to break down Virtu's 2013 net trading income by product line. We were not surprised to find that of the $45 million in total growth, the largest income category, US stocks growth was a tiny 5% of all, rising by $2.3 million in 2013, half the $4.5 million growth a year earlier. In fact, between EMEA, APAC and US Equities, there was very limited growth in 2013, while commodities posted an outright trading income decline. So indeed, it appears to be the case that growth in conventional products has indeed plateaued, as more and more HFT competitors rush in. And yet, one product stood out. It is highlighted on the chart below...

US Markets Closed On Fifth Anniversary Of Jerome Kerviel Day

To some, today is Martin Luther King day and as a result the US markets are closed, especially since today is also the day when Obama celebrates his second inauguration with Beyonce, Kelly Clarkson and James Taylor at his side (hopefully not on the taxpayers' dime). To others, January 21 is nothing more than the anniversary of the real beginning of the end, when five years ago a little known SocGen trader named Jerome Kerviel could no longer hide his massive futures positions and was forced to unwind them, sending global indices plunging resulting in the biggest single day drop in the Dax (-7.2%), and punking the Fed into an unannounced 75 bps cut. Luckily, today such cataclysmic unwinds are impossible as the market is priced perfectly efficiently, without central bank intervention, price transparency is ubiquitous and the Volcker rule has made prop trading by banks, funded by Fed reserves (which are nothing more than the monetization of excess budget deficits) and excess deposits, impossible.

Bruno Iksil Is Dunzo

The last time a French trader delivered a bomb this big (Jerome Kerviel), the Fed cut the discount rate by 75 bps. As for this particular Frenchman, his best epitaph is his Bloomberg profile page. Recall:

"Chuck is french ; champion of 'kick it', walking over water and humble.. yes"

You can now add "fired." Oh, and it is all Egan Jones' fault of course, who downgraded JPM on April 13, while all the other rating agencies were posturing for the highest possible bribe to keep their mouths shut.